Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
To study the effects of a terms-of-trade deterioration the paper constructs a dynamic model with heterogeneous households that maximize intertemporal utility. It shows that insofar as this shock leads to a redistribution of wealth--an outcome ignored by the literature because of the representative-agent assumption invariably adopted--it may give rise to an initial current-account deficit and nonmonotonic adjustment paths. The paper also buttresses the argument that heterogeneous-household models help explain the observed "excess smoothness" of consumption. Copyright 1995 by Blackwell Publishing Ltd.